Public Health Funding Allocations

From April 2013, public health responsibilities will transfer from the NHS to local government. A ring-fenced public health grant will support local authorities in carrying out these new public health functions. This briefing summarises the recent Department of Health announcements on public health funding allocations and key implications for London boroughs.

Background

In November 2010 the government set out its vision to help people live longer, healthier and more fulfilling lives, and to focus on reducing health inequalities. Since then, a programme has been put in place to improve public health through strengthening local action, supporting self-esteem and behavioural changes, promoting healthy choices and changing the environment to support healthier lives. As part of this, from April 2013 there will be major changes to the public health system in England:

- Local authorities will take the lead for improving health and coordinating local efforts to protect the public’s health and wellbeing, ensuring health services effectively promote population health and take on responsibilities for commissioning a range of public health services.

- A new executive agency, Public Health England (PHE) will deliver services, act as a lead for public health and support the development of the specialist and wider public health workforce.

- The NHS will continue to play a role in commissioning services, providing care, tackling inequalities and providing clinical contact.

- The Department of Health (DH) will set the legal and policy framework, secure resources and advocate public health to the government.

Key issues

The announcement of local government public health allocations has been very late which has had a direct impact on boroughs’ ability to effectively plan their local public health services in advance of April 2013.

- More positively, local authorities have received protected two-year above inflation increases in their public health funding allocations that are significantly higher than expected. Aver- age increases for London authorities are 4.7 per cent (2013/14) and 4.3 per cent (2014/15).

- The allocations do however raise a number of potential issues for London local authorities, these include:

  - Wide variation in terms of the allocated spend per-head between boroughs. Excluding the City, spend per head in 2013/14 ranges from £29 (Bexley) to £132 (Westminster); and in 2014/15, from £32 (Bexley) to £133 (Westminster and Kensington and Chelsea)
  - London seems to be losing out through the formula in the longer term which is hidden by significant uplifts in the baseline for 2013/14 and 2014/15
  - It remains unclear how funding relates to the cost of actually delivering the public health function (the original baseline was solely based on previous PCT priorities)
  - The ring fenced budget is accompanied by relatively onerous reporting requirements given the amounts of funding involved.

- Overall, most boroughs are getting on with the transition and are focussing on taking ownership of PH functions and integrating with other work. There is currently no sense of significant issues arising at this stage.

- London Councils future work will focus on gaining a good understanding of funding implications as local authorities ‘bed in’ their new public health responsibilities and influencing the future public health formula and allocations.

**Approach to determining allocations**

In February 2012 the DH published ‘baseline estimates’ for public health funding. These were based on Primary Care Trust’s (PCT’s) actual spend in 2010/11, mapped to local authority areas to produce a first indication of how public health resources might be distributed in the future.

Based on this information, it was estimated that, in 2012/13, public health expenditure for England would total £5.2 billion, of which £2.2 billion would be on services falling within future local authority responsibility. Of this amount, £471 million (21 per cent) was attributed to London.

London Councils expressed concern at the time that the way expenditure has been worked out for the baseline year takes no account of the need for a minimum spend per head. For some localities where there has historically been a lower spend, this raised questions about how easy it would be for boroughs to deliver on their new public health responsibilities.

In June 2012 DH published an update on their thinking on local authority public health finance. They commissioned the Advisory Committee on Resource Allocation (ACRA) to develop a formula for the allocation of the public health budget to local authorities. This included a range of interim recommendations including using the standardised mortality ratio (SMR) for those aged under 75 years as the main population health measure.

Using ACRA’s interim recommendations, London Councils analysis showed that at a London regional level, ACRA’s recommendations resulted in a lower relative share of the total resources available – a reduction of 3.6 per cent, from 21.2 per cent to 17.6 per cent. This was however a mixed picture with some boroughs appearing to benefit from this suggested approach.

London Councils submitted a response to ACRAs interim recommendations in August 2012. Key elements of the response proposed that:

- The sole use of the standardised mortality ratio (SMR) under 75 as a means of

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2 SMR is a quantity, expressed either as a ration or percentage, quantifying the increase or decrease in mortality of a cohort with respect to the general population. determining the allocation of resources did not adequately reflect public health need.

- Part of the allocation should be based on realistic costs of prescribed services (e.g. NHS Health Check).
- The remainder should be based on a formula, however in addition to SMR\<75 other factors need to be reflected in the formula including levels of deprivation (that link to levels of long term illness) and population age, churn, diversity and ethnic mix, all of which impact on local needs and the costs of delivering public health services.
- Overall levels of funding needed to be sufficient to meet needs and the use of PCTs historic spend as a baseline was not an appropriate basis for this.
- For boroughs in which public health had historically been underfunded an immediate uplift was requested.

Government’s final public health allocations formula for 2013/14 and 2014/15 are based on the final recommendations made by ACRA to the Secretary of State following the consultation on the interim recommendations referred to above.

Analysis

2013/14 and 2014/15 allocations

The final baseline spend estimates used for 2013/14 and 2014/15 are the baseline estimates previously published in February 2012 and adjusted for a range of factors, including: updates received from PCTs; updated estimates relating to the costs of termination of pregnancy, sterilisation and vasectomy services (now removed as will not be a local authority responsibility); additional spend on support for surveillance and control of infectious diseases (originally apportioned to Public Health England); additional amendments made by DH to original 2010-11 spending estimates using additional information collected during 2012. Drug Interventions Programme (DIP) funding is now included.

The government has clearly taken on board a number of the concerns raised by local authorities in response to the consultation on ACRA’s interim recommendations in respect of both the formula calculation and quantum of funding for public health

Key funding announcements and impacts for London local authorities

- London’s allocation is £553 million in 2013/14 (20.8 per cent of national share) and £578 million in 2014/15 (20.7 per cent)
- Average increases for London authorities are 4.7 per cent and 4.3 per cent each year, compared to England averages of 5.5 per cent and 5.0 per cent.
- In 2013/14, average increases are 3.6 per cent for inner London authorities and 6.1 per cent for outer London
- DH has set a minimum of 2.8 per cent and maximum of 10 per cent growth in budgets for each year – 17 London authorities are at the minimum in 2013/14 and 19 in 2014/15, 9 and 8 respectively are at the maximum.
- Without the minimum floor London would have faced a – 5 per cent cut in funding in 2013/14 and a further -4.8 per cent in 2014/15

Ring-fenced conditions

Public health funding allocations are accompanied by a number of ring-fenced conditions. These include: a requirement for this funding to be used only for purposes related to local authorities’ public health function; a requirement to report against 18 categories of spend. Funding can be used for revenue or capital spend, although the capital spend cannot be on items that entail borrowing or a finance lease; it can be used for pooling, subject to certain conditions.

3 These are: 1. sexual health services - STI testing and treatment 2. sexual health services - contraception 3. NHS Healthcheck programme 4. local authority role in health protection 5. public health advice 6. National Child Measurement Programme 7. sexual health services, advice, prevention, promotion 8. obesity, adults 9. obesity, children 10. physical activity, adults 11. physical activity, children 12. drug misuse, adults 13. alcohol misuse, adults 14. substance misuse, youth services 15. stop smoking services and interventions 16. wider tobacco control 17. children (5-19) health programmes 18. Miscellaneous Pace of Change The baseline funding allocations have been based upon historic expenditure while the actual allocations are based upon an assessment of an authority’s spending requirement. One of the crucial elements relating to discussions on public health funding is a concept known as ‘pace of change’ – i.e. the speed at which funding allocations move from one based upon historic spend to one based on an assessment of local need.

Commentary London local government has achieved an immense amount in preparation for the public health transfer and is poised to take the reins of its new responsibilities. However, as recently as summer 2012 a London Councils survey of London local authorities identified that three-quarters of London boroughs did not feel assured that they will receive sufficient funding to enable them to meet their new public health responsibilities.

Confirmation of their actual funding allocations has given local authorities increased confidence that they will have sufficient resources to deliver effectively on their new responsibilities. In addition, the announcement of two year period and protection in real terms funding will be helpful in enabling boroughs to plan their services more effectively, at least in the short to medium term.

Concerns remain however regarding the weakness of the funding formula in terms of the use of SMR\<75 as the main measure of deprivation/public health, particularly in relation to London. For example, relative to the Index of Multiple Deprivation (IMD) 2010, SMR\<75 shows London as having less deprivation.

While ACRA has adjusted its approach to calculating for deprived areas they have also changed the distribution of groupings of population areas, the net effect of which sees London lose slightly from this approach.

Initial modelling work by London Councils has shown that tweaking the assumptions in the formula will not increase London’s share substantially. More major changes such as a different measure of public health would be needed for London to substantially increase its share of need to a level equivalent to its share of baseline spending.

Although there is a relatively positive outcome from the settlement allocations in terms of an increased quantum and two-year protection, in the medium to long term it will be crucial that the pace-of-change needs to be long as is needed by those most affected i.e. those furthest away from their target allocations. London Councils will continue to explore the potential in working in the longer term with ACRA to develop a more evidenced based formula and a measure which more suitably takes into account London’s complex demography and public health needs.

Author: Addicus Cort, Policy and Projects Officer (T: 020 7934 9837) Click here to send a comment or query to the author

Links: Department of Health: public health funding allocations London Councils policy pages: Public Health

This member briefing has been circulated to: Portfolio holders and those members who requested policy briefings in the following categories: Health and Adult Services; Local Government Finance